Investors call out for green opportunities, as EU aims to open the door

An airtanker drops water in an effort to extinguish a forest fire in Ourense, northwestern Spain, 19 July 2020. [Photo: EPA-EFE/MANOLO OTERO]

In order to make the post-pandemic recovery as sustainable as possible, long-term green investments will be in hot demand. Participants at a virtual conference called “Investing post-COVID: is a green recovery assured?” called for more opportunities and a viable framework.

An increase in low probability, high impact events like forest fires, is showing that global warming is a big risk for the insurance industry.

At a virtual event organised by EURACTIV on 14 July, MEP Nicolae Ștefănuță (Renew) said that the acceleration of climate change means that it is important to stick “to the plan for the next 30 years, in order to make [climate neutrality by 2050] happen and achieve global leadership for the first time on this point”.

“Europe needs to drive all its forces and efforts, public and private, to this goal,” the Romanian lawmaker – a member of the European Parliament’s environment committee – added.

Being ambitious and pragmatic

“It’s all about moving the focus of private companies from the very short-term to mid- and long-term and risk management. It’s a revolution,” Frédéric de Courtois, general-manager at Generali said. According to him, the three-year plan is ‘nonsense’, because investors need to have a longer vision.

For Astrid Manroth, director of finance strategy at the European Climate Foundation, “sustainable finance is at heart of rebuilding better in Europe, we need every part of the financial system to play its part”.

This must be implemented through public finance with “50% of earmarking for climate action across all the instruments, and not 25%” in addition to support from governments, the European Central Bank and national banks, she added.

Yvon Slingenberg, director of the international and mainstreaming and policy coordination at the European Commission’s climate directorate, agreed.

“We need to attract the private sector and help them with the right instruments, like support from governments through grants and loans,” she said.

Her work is currently geared towards identifying useful sectors at member state level. “We don’t have a list today, but will in the coming months. It won’t be the same in every region and member state, it depends on the local challenges.”

Frédéric de Courtois observed that “there is more money than opportunities”. To overcome this lack of opportunities and implement the Commission agenda, three points need to be solved.

Firstly, the solvency framework needs to be reviewed. “We need green solvency, to make sure that insurance companies and long-term investors are in adequate profitability on their green long term investment, which is not the case right today. Today it is too short-term oriented.”

Secondly, investors need projects to invest in, such as infrastructure. They struggle to invest in SMEs. “We need to be much more granular and to have the inability to invest in every country, in smaller projects,” he suggested. 

Thirdly, he emphasised the need to implement sustainable finance initiatives, through a new taxonomy, “getting the details right about and be both ambitious and pragmatic.”

Astrid Manroth shared her worries towards the risk of greenwashing though. Contrary to some “sincere investors like Generali who have a long-term investments perspective”, “other groups are trying to set their own standards that are not always credible”, she said.

That is why the taxonomy is important, as the “very science-based, standardised and independent benchmark and economic labelling brings transparency”. 

[Edited by Sam Morgan]

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